Faber Report: Making Cents Out of the Banks

If the broader market continues to take its cue from the financials, investors have a good deal more information by which to judge the health of the banking system after Citigroup, JPMorgan Chase and Goldman Sachs reported results this week and Wells Fargo gave a details-light pre-announcement last week.

Or do they?

Even with some major financials having reported and Bank of America , Morgan Stanley and Wells Fargo due with complete results next week, the prospects for the banking industry remain murky.

Yes, Goldman earned plenty of money, succeeded in raising $5 billion from an issue of common equity. The bank also wants to pay back its TARP money. But as good as its reults were, Goldman benefited by changing to a calendar year from a fiscal year—isolating the losses it took in December to a quarter made up of only one month.

JPMorgan added $4.2 billion to its loan loss reserves and still managed to earn more than $2 billion in the quarter. But the always feisty Jamie Dimon was far from ready to declare the crisis over.

Citigroup & the Consumer

CNBC's David Faber goes deep inside Citigroup's quarterly numbers.

Today's results from Citi are more of the same: a bottom line beat on earnings estimates, aided by a $2.5 billion gain as a result of the widening of its credit spreads.

Its new CFO, Ned Kelly, was likewise far from giddy on the company's call and would not rise to questioners' bait as to when this will all end.

Chances seem good it will still be a while. We are now squarely focused on the state of the consumer when it comes to the bank's balance sheets.

Most of the losses related to subprime mortgages have been taken. But prime borrowers at JPMorgan are having a tougher time paying their mortgages back as evidenced by the chart. Meanwhile, over at Citi, the deterioration in the company's credit-card portfolio is accelerating.

Both of those trends, which relate to rising unemployment, seem likely to continue—meaning there will be a continued need to keep those loan-loss provisions coming.